VOLKSWAGEN AG Credit Suisse First Boston First Global Automotive Conference. Mr. Frank Witter CFO Volkswagen of America. New York, 8 September 2004

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1 VOLKSWAGEN AG Credit Suisse First Boston First Global Automotive Conference Mr. Frank Witter CFO Volkswagen of America New York, 8 September 2004

2 Agenda H1 Results Volkswagen Group ForMotion Tariff Negotiations China U.S. Market Volkswagen of America Audi of America Financial Services VW FS Globally LeasePlan VCI 2 Key Points Interim Report January June 2004 First-half sales revenue up 7.3 % on previous year Operating profit before special items down 19.8 % against previous year at 979 million due to continuing difficult market conditions and unfavourable exchange rates; second quarter strong improvement on first Operating profit after special items down 30.3 % against prior year at 851 million Net cash flow in the Automotive Division well above previous year, at a positive 270 million Investments in tangible assets in the Automotive Division 15.3 % below level in first half of 2003 ForMotion program to improve Group earnings capability delivers first results totalling over 400 million Product initiative successful: - Golf the clear leader in its segment; Touran at the top of its class - New Škoda Octavia, Audi A6, SEAT Altea and Caddy Life launched Positive trend in Financial Services Division sustained Joint venture to acquire LeasePlan Corporation agreed 3

3 Volkswagen Group Deliveries to Customers January June 2003/ units Jan. June 2003 Jan. June , % 2,473 2,516 2,000 1, % 1,718 1, % 1,590 1,627 1, % Volkswagen Brand Group Audi Brand Group % Commercial Vehicles Volkswagen Group Europe / Rest of the World % % North America South America/ South Africa -4.0% Asia-Pacific 4 Volkswagen Group Analysis by Market January - June Sales Revenue Operating Result million Europe/Remaining markets 33,719 31,063 1,299 1,039 North America 6,559 7, South America/South Africa 2,392 1, Asia-Pacific 1) 3,270 2, Volkswagen Group 45,940 42, ,220 before special items Special items Volkswagen Group 1) 45,940 42, ,220 1) The sales revenue and operating results of the joint venture companies in China are not included in the figures for the Group and for the Asia-Pacific market. The Chinese companies are consolidated using the equity method, achieving a (pro-rata) operating profit of 251 (361) million. 5

4 Volkswagen Group Analysis by Business Line January - June Sales Revenue Operating Result million Volkswagen Brand Group 24,374 22, Audi Brand Group 13,277 13, Commercial Vehicles 2,716 2, Remaining Companies 1) Financial Services / Europcar 5,451 5, Volkswagen Group 45,940 42, ,220 before special items Special items Volkswagen Group 45,940 42, ,220 1) Primarily AutoVision GmbH, Coordination Center Volkswagen S.A., Volkswagen International Finance N.V., Volkswagen Investments Ltd., VW Kraftwerk GmbH, Volkswagen Immobilien, gedas group, VW Versicherungsvermittlungs-GmbH, Volkswagen Beteiligungs-Gesellschaft mbh (including Volkswagen Transport GmbH & Co. OHG and VOTEX GmbH in the previous year). 6 Cash Flows from Operating Activities and Cash Flows from Investing Activities million, Automotive Division 1) 5,000 4,000 3,000 3,937 2,874 3,495 3,765 2,000 1,000 0 From Investing Activities From Operating Activities From Investing Activities From Operating Activities January June 2003 January June ) Including allocation of the consolidation adjustments between the Automotive and Financial Services divisions. 7

5 Outlook Interim Report January June 2004 It is likely that the trend in the automotive business will again fall short of any substantial improvement through the second half of 2004, mainly because of ongoing weak demand in key markets, unfavourable exchange rates, and the current high price of oil. Moreover we expect that there will be no let up in competitive pressure in key car markets, such as the USA, Europe and China. We therefore forecast that growth in deliveries to customers in the second half of 2004 will be similar to that in the first half of the year. Consequently, our expected sales volume for the year as a whole, though up on the previous year, will fall well short of our original expectation. Moreover, Volkswagen s model initiative will entail a number of important new start-ups and product changes. All this, along with the aforementioned start-ups, has the result that available production capacity cannot be adequately utilized. With ForMotion the Group has launched a global program aimed at substantially cutting costs, reducing the investment ratio and improving sales performance. The program s first-half contribution to earnings totaling over 400 million will rise to well over 1 billion over the full year. The upfront expenditures and special product measures, as well as structural and process changes, associated with ForMotion will, however, impact negatively on earnings. These elements are recognized separately in the income statement under Special items. Under the unfavourable conditions outlined above, 2004 operating profit before special items could amount to only 1.9 billion instead of the original 2.5 billion target. We expect that the special items will total around 400 million. 8 ForMotion Targets million 3,100 Product Costs (Mr. Garcia) 1,000 Additional Earnings Potential Earnings Improvement Program ( Run Rate ) ForMotion 2, One- Off Expenditure (Dr. Winterkorn) Overheads / Process Optimization (Mr. Pötsch) Performance Enhancement Sales (Dr. Hartz) Commercial Vehicles (Dr. Weißgerber) Financial Services (Dr. Neumann) Projected Earnings, Planning Round 52 Foreign Sales Subsidiaries (Dr. Hartz) Total 3,100 9

6 Tariff Round 2004 Remuneration policy Co-Investment for job security Health component New definition of working time demographic structure 100% value added time Job-Families: remuneration system Europe-wide competence and personnel development concept Competitive Apprenticeship Most flexible automobile manufacturer 10 Volkswagen in China FAW-Volkswagen, Changchun VW (China) Investment Co. Ltd., Beijing Volkswagen Transmission (Shanghai) Co. Ltd. Shanghai Volkswagen 11

7 China Total Revenue Development of Volkswagen Joint Ventures* million 12,000 10,000 26% 10,847 8,000 17% 8,571 6,000 4,000 5,971 23% 7,322-7% H1: 5,463 5,103 2, *Shanghai Volkswagen and FAW-Volkswagen 12 China Total Investment by Volkswagen Joint Ventures* H bln structural investment 15% 20% capacity increase 4.8 bln 65% H product related *Shanghai Volkswagen, FAW-Volkswagen, and others 13

8 Agenda H1 Results Volkswagen Group ForMotion Tariff Negotiations China U.S. Market Financial Services Volkswagen of America Audi of America VW FS Globally LeasePlan VCI 14 Volkswagen & Audi Retail Sales U.S. and Canada Vehicles 700, , , , , ,000 86,

9 VW & Audi Sales - August 04 YTD Variance to 2003 August Note 2004 YTD 1Q04 2Q04 VW U.S. 174, % -25.2% -3.4% VW Canada 20, % -40.8% -12.1% Audi U.S. 51, % -5.6% -9.2% Audi Canada 5, % 15.0% -3.7% Total VW 194, % -26.9% -4.5% Total Audi 56, % -3.8% -8.7% Total VWoA 251, % -22.1% -5.4% 16 Trucks Dominate The US Vehicle Market USA Market Retail Vehicle Sales 9,500 9,345 9,000 8,500 8,849 8,561 8,430 8,753 8,091 8,752 9,060 8,000 7,500 7,621 7,555 7, FC Car Truck Source:Historicals: AutoData Forecast : MPL 17

10 July VWoA Total Incentive Spending USA January 01 - July 04 $4,500 $3,750 $3,000 $2,250 $1,500 $750 $0 Jan '01 July Jan '02 July Apr Oct Apr Oct Apr Oct Apr Jul Jan '03 Jan '04 VWoA Domestics Asians 18 Volkswagen Wins Strategic Vision Total Quality Award Volkswagen was the top-scoring full line corporation in the Strategic Vision Total Quality Index Awards for the 6 th consecutive year. The TQI is a comprehensive measure of the experience of the owner that encompasses positive product characteristics, reliability, the dealership experience, and the emotional response (owner delight & emotional attachment to the vehicle). Volkswagen of America 876 Nissan Motor Corporation 867 American Honda 864 General Motors 860 Toyota Motor Sales 855 Ford Motor Co. 852 Chrysler Group

11 GTI 5 th generation of a classic Consciously emulates 1 st generation GTI Due late 2005 in the US. 20 Concept C Cabriolet-Coupe concept Fold-away steel roof 4-seat coupe and cabriolet in one 21

12 Volkswagen Dealer Composition Number of Dealers United States 700 Marketplace Exclusive Dual 600 Number of Dealers Audi A6 Due 4 th quarter 2004 in the US 255 h.p. 3.2L V6 355 h.p. 4.2L V8 Larger, more upscale 23

13 Audi A3 Due 1 st half of 2005 in the US 4 & 6 cylinder engine Sporty Elegance & Versatility 24 Audi Dealer Composition Number of Dealers United States Number of Dealers Exclusive Brand Dedicated Universal

14 Audi Objective: Become A Top Luxury Brand In U.S. Brand strengthening North American Sales Thousand units ~ 200+ Product offensive Develop a brand spike emphasizing Power & Control, Trendsetting, and Design New A New A6 Improve on luxury must - haves (reliability, prestige, innovation, and performance) Improve brand awareness significantly A3 to US Plus: New A4, New SUV, Upgraded TT, and more! Leverage product offensive to expand beyond traditional customer base Operational excellence for profitable growth Dramatically improve product quality, reaching IQS target well below 100 Introduce new supply chain model, moving to increased forward selling while reducing dealer stock levels Build exclusive, performance -driven, and profitable dealer network Achieve top 5 customer service experience by growing capacity and improving dealer performance Expand CPO business to improve residual values and attract new customers to the brand 26 Agenda H1 Results Volkswagen Group ForMotion Tariff Negotiations China U.S. Market Financial Services Volkswagen of America Audi of America VW FS Globally LeasePlan VCI 27

15 Volkswagen Financial Services Worldwide Canada USA Mexico Brazil Argentina NAR Subsidiaries SAR Subsidiaries Netherlands Belgium Great Britain Ireland France Switzerland Portugal Spain Italy VW FS AG Subsidiaries and Branches Sweden Germany Poland Russia Czech Republic Slovakia Austria Turkey China Japan Taiwan Singapore Australia New Zealand Affiliates of Volkswagen Financial Services AG (Austria and Switzerland only insurance agency services) Companies with which service agreements exist 28 Importance of Services along the Automotive Profit Chain Distribution + Financial Services Business Manufacturer Systems and modules suppliers 7% 16% 62% 5% 9% 15% 12% New car retailing Leasing/Financing business Insurance business Used car retailing 8% Component specialists 8% 2% 2% Standard parts suppliers 5% 5% Raw material providers 4% 17% Car rental business Service and parts business Source: Company data, CSFB estimates, Automotive News Almost 2/3 of profits per car is realised post-purchase mainly in financing, insurance and services/parts 29

16 LeasePlan acquisition Supervisory Board approved the acquisition of LeasePlan, together with 2 co-investors On completion Volkswagen Group will hold 50%, the other co-investors 25% each LeasePlan one of the leading multi-brand fleet management companies worldwide The Board of Management was authorized by the Supervisory Board to explore the option of fully or partially using Volkswagen shares currently held as treasury stock. 30 VCI Growth Trend Managed Assets $ $ $ Assets ($Billions) $14.0 $12.0 $10.0 $8.0 $ Accounts (000's) $ $ $ Assets ($Billions) $2.1 $2.0 $2.4 $3.3 $4.1 $4.8 $5.7 $7.5 $10.1 $13.0 $15.9 $18.2 $18.4 Accounts (000's) FC 0 31

17 VCI U.S. & Canada Portfolio Distribution As Of June 30, 2004 ACCOUNTS NET RECEIVABLES Whsle 6% Whsle Rec. 9% Cap. Loan 3% Retail 56% Lease 38% Retail Rec. 43% Lease Rec. 45% 32 VOLKSWAGEN AG Credit Suisse First Boston First Global Automotive Conference Mr. Frank Witter CFO Volkswagen of America New York, 8 September 2004